Email (excerpted), Terry Mitchell, president, Momark Development LLC, June 20, 2017
1:38 p.m.
...There are some “hidden” costs the COA imposes that other cities may or may not impose . .
· The design standards are generally higher (MUCH?) than other cities . . . That translates into higher construction costs.
o Some engineers and contractors can give some guidance here .
o Examples include:
§ Heritage trees and tree replacement. On one affordable project of which I am aware, $3,000 per unit is being spent on tree replacement (even after preserving all heritage trees)
§ Water quality – the ability to do wet ponds and other types of ponds . . . Now the standard is to do “rainwater gardens” at a cost higher than before. Did anyone consider if the additional costs provided such a benefit that making housing more unaffordable was worth it?
§ Fire standards . . . over and over. Not as well versed here, but units are lost (and costs are therefore higher) as more and more fire requirements are imposed . . . We already sprinkler, etc., but now cutting a 20’ or 25’ fire lane out of the property (even though access is available) is often required . . .
· Since 2014, and more recently, in 2016, the City of Austin has begun to add costs that are new (and in my experience) add to the costs greatly:
o Austin Energy now is charging the developer for all of its infrastructure upgrades . . . For example: For me to get a site development permit in 2012 for 119 condo, the fees for the site development permit (not cap rec fee, etc.) was about $83,000 or so. Today, on a current condo project, we had to pay AE about $350,000 to get electricity. We were required to pay AE and they use their contractor. My contractor and construction manager believed there would be thousands of dollars in savings if we could install the improvements . . . Instead, no bidding. Had to pay them and they used their contractor.
o Offsites are now aggressively charged to the project. This is not a fee, but you can’t get your permit unless you pay.
§ On a recent project, where the impervious coverage being redone (about an acre of land) was 100% before and 100% after (out of about a 19 acre drainage basin), the developer was required to front $6 million for a 72’ drainage pipe replacement (even though the developer would use less than 10% of the pipe). After haggling, the City agreed to reimburse 50% of the pipe after the developer paid $6mm to install it . . .
§ In my current project, we are paying $300,000 to replace 100% of an 8” water line abutting our project and into the next block even though we use much less than ½ of the water line capacity. (What are our capital recovery fees paying for?)
§ In my current project, we had to spend $150,000 replacing a wastewater line for a house adjacent to our project. Our project does not use the wastewater line, yet we could not get our site development permit unless we agreed to pay. The city noted we “might hit” the wastewater line (to which we responded, if we damage the wastewater line, we will fix it) . . . We paid $150,000 for a line that we do not use.
o The new transportation “reasonable proportionality” charges are being levied against projects . . . To be paid up front to get your site development permit. These can range from a few hundred thousand dollars to well over a million dollars . . . My experience is that these charges can be very significant.
o The new parkland dedication fees you mentioned must also be paid up front. Big cost.
o New phasing fees. A smaller but nevertheless charge when you try to save money and phase your project.
· The time delays drive costs way up. Not only do construction costs go up, but consulting fees (engineering, legal, etc.) climb as well.
...
Terry Mitchell
Momark Development LLC